Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ(Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ

Air Lease Corporation (the Company, ALC, we, our or us) was incorporated in the
State of Delaware and licensed to operate in the State of California. We commenced
operations in February 2010 and elected a fiscal year end of December 31. The Company is
principally engaged in the leasing of commercial aircraft to airlines throughout the
world. We supplement our leasing revenues by providing fleet management and remarketing
services to third parties. We typically provide many of the same services that we perform
for our fleet, including leasing, releasing, lease management and sales services for
which we charge a fee, with the objective of assisting our clients to maximize lease or
sale revenues.

Initial Public Offering

On April 25, 2011, we completed an initial public offering of our Class A Common Stock
and listing of our shares on the New York Stock Exchange (NYSE) under the symbol AL.
The offering was upsized by 20% and the underwriters exercised their over-allotment
option in full, resulting in the sale of an aggregate of 34,825,470 shares of Class A
Common Stock. We received gross proceeds of $922.9 million.

Shelf Registration Statement

In accordance with its obligations under the Registration Rights Agreement, dated June 4,
2010, by and between our Company and FBR Capital Markets & Co, the Company filed with the
Securities and Exchange Commission a shelf registration statement through a Registration
Statement on Form S-1 (File No. 333-173817). Once effective it is anticipated that the shelf registration statement will provide
for the resale of the following registrable shares: (i) 61,810,867 shares of Class A
Common Stock, including up to 482,625 shares of Class A Common Stock issuable upon
exercise of outstanding warrants and up to 1,829,339 shares of Class A Common Stock
issuable upon conversion of outstanding Class B Non-Voting Common Stock, and (ii)
1,829,339 shares of Class B Non-Voting Common Stock.

2. Basis of Preparation

The Company consolidates financial statements of all entities in which we have a
controlling financial interest, including the account of any Variable Interest Entity in
which we have a controlling financial interest and for which we are determined to be the
primary beneficiary. Certain prior year amounts have been reclassified to conform to the
2011 presentation. The accompanying Consolidated Financial Statements have been prepared
in accordance with Generally Accepted Accounting Principles in the United States of
America (GAAP) for interim financial information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete financial
statements. All material intercompany balances are eliminated in consolidation.

The accompanying unaudited consolidated financial statements include all adjustments,
including normally recurring adjustments, necessary to present fairly the Companys
financial position, results of operations and cash flows at June 30, 2011, and for all
periods presented. The results of operations for the three- and six-months ended June 30,
2011, are not necessarily indicative of the operating results expected for the year
ending December 31, 2011. These financial statements should be read in conjunction with
the financial statements and related notes included in the Companys final prospectus
filed with the Securities and Exchange Commission on April 19, 2011 pursuant to Rule
424(b) under the Securities Act of 1933 (Rule 424(b)) in connection with our public
offering.

The Companys consolidated debt as of June 30, 2011 and December 31, 2010 are summarized
below:

(dollars in thousands)

June 30, 2011

December 31, 2010

Warehouse facility

$

709,252

$

554,915

Secured term financing

503,419

223,981

Unsecured financing

170,899

133,085

Total

$

1,383,570

$

911,981

The Companys secured obligations as of June 30, 2011 and December 31, 2010 are summarized below:

(dollars in thousands)

June 30, 2011

December 31, 2010

Non-recourse

$

740,242

$

573,222

With recourse

472,429

205,674

Total

$

1,212,671

$

778,896

Number of aircraft pledged as collateral

40

29

Net book value of aircraft pledged as collateral

$

1,939,832

$

1,266,762

a.

Warehouse Facility

On April 1, 2011, the Company executed an amendment to the Companys non-recourse,
revolving credit facility (the Warehouse Facility) that took effect on April 21, 2011.
This facility, as amended, provides us with financing of up to $1.25 billion, modified
from the original facility size of $1.5 billion. We are able to draw on this facility, as
amended, during an availability period that ends in June 2013. Prior to the amendment of
the Warehouse Facility, the Warehouse Facility accrued interest during the availability
period based on LIBOR plus 3.25% on drawn balances and at a rate of 1.00% on undrawn
balances. Following the amendment, the Warehouse Facility accrues interest during the
availability period based on LIBOR plus 2.50% on drawn balances and 0.75% on undrawn
balances. Pursuant to the amendment, the advance level under the facility was increased
from 65.0% of the appraised value of the pledged aircraft and 50.0% of the pledged cash
to 70.0% of the appraised value of the pledged aircraft and 50.0% of the pledged cash.
The outstanding drawn balance at the end of the availability period may be converted at
our option to an amortizing, four-year term loan with an interest rate of LIBOR plus
3.25% for the initial three years of the term and margin step-ups during the remaining
year that increase the interest to LIBOR plus 4.75%. As a result of amending the
Warehouse Facility, we recorded an extinguishment of debt charge of $3.3 million from the
write-off of deferred debt issue costs when the amendment became effective on April 21,
2011.

During the second quarter of 2011, the Company drew $104.9 million under the Warehouse
Facility and incrementally pledged $163.1 million in aircraft collateral. As of June 30,
2011, the Company had borrowed $709.3 million under the Warehouse Facility and pledged 28
aircraft as collateral with a net book value of $1.2 billion. As of December 31, 2010,
the Company had borrowed $554.9 million under the Warehouse Facility and pledged 23
aircraft as collateral with a net book value of $930.0 million. The Company had pledged
cash collateral and lessee deposits of $67.5 million and $48.3 million at June 30, 2011
and December 31, 2010, respectively.

During the second quarter of 2011, two of our wholly-owned subsidiaries entered into two
separate secured term facilities, with recourse to the Company, aggregating $82.8 million. The two
facilities consisted of a three-year $20.3 million facility at a floating rate of LIBOR
plus 2.75% and a $62.5 million facility with an eight-year $56.0 million tranche at a rate
of LIBOR plus 2.99% and a two-year $6.5 million tranche at a rate of LIBOR plus 2.10%. In
connection with these facilities, the Company pledged $129.0 million in aircraft
collateral.

The outstanding balance on our secured term facilities was $503.4 million and $224.0
million at June 30, 2011 and December 31, 2010, respectively.

c.

Unsecured Financing

During the second quarter of 2011, the Company issued $120.0 million in senior unsecured
notes in a private placement to institutional investors. The notes have a five-year term
and a coupon of 5.0%. In addition, we entered into two five-year and one three-year
unsecured term facilities totaling $17.0 million with interest rates ranging from 3.0% to
4.0%.

We ended the second quarter of 2011 with a total of nine unsecured term facilities. The
total amount outstanding under our unsecured term facilities was $170.9 million and $13.1
million as of June 30, 2011 and December 31, 2010, respectively.

In addition, we increased the capacity of one of our existing three-year revolving
unsecured credit facilities from $25.0 million to $30.0 million. The Company ended the
second quarter of 2011 with a total of 12 bilateral revolving unsecured credit facilities
aggregating $313.0 million, each with a borrowing rate of LIBOR plus 2.00%. We did not
have any amounts outstanding under our bilateral revolving unsecured credit facilities as
of June 30, 2011 compared to $120.0 million outstanding as of December 31, 2010.

d.

Maturities

Maturities of debt outstanding as of June 30, 2011 are as follows:

(dollars in thousands)

Years ending December 31,

2011

$

35,063

2012

71,637

2013

204,764

2014

220,973

2015

228,611

Thereafter

622,522

Total

$

1,383,570

(1)

(1)

As of June 30,
2011, the Company had $709.3 million of
debt outstanding under the Warehouse
Facility which will come due beginning
in June 2013. The outstanding drawn
balance at the end of the availability
period may be converted at the Companys
option to an amortizing, four-year term
loan with an increasing interest rate
and has been presented as if such option were exercised in the
maturity schedule, above.

As of June 30, 2011, we had commitments to acquire a total of 234 new and nine used
aircraft for delivery as follows:

Aircraft Type

2011(1)

2012

2013

2014

2015

Thereafter

Total

Airbus A319-100

1











1

Airbus A320/321-200

5

10

13

12

7



47

Airbus A320/321 NEO(2)(3)











50

50

Airbus A330-200/300

6

6









12

Boeing 737-700

2











2

Boeing 737-800(2)

2

3

12

12

14

37

80

Boeing 767-300ER

2











2

Boeing 777-300ER(3)







2

3



5

Boeing 787-9(3)











4

4

Embraer E175/190

11

19









30

ATR 72-600

2

8









10

Total

31

46

25

26

24

91

243

(1)

Of the 31 aircraft that we will acquire in the remainder of 2011,
the following nine aircraft will be used aircraft: the A319-100, one A320-200, one
A330-200, both 737-700s, both 737-800s and both 767-300ERs.

(2)

We have cancellation rights with respect to 14 of the Airbus A320/321
NEO aircraft and four of the Boeing 737-800 aircraft.

(3)

As of June 30, 2011, the Airbus A320/321 NEO aircraft, the Boeing 777-300ER
aircraft and the Boeing 787-9 aircraft were subject to non-binding memoranda of
understanding for the purchase of these aircraft.

Commitments for the acquisition of these aircraft at an estimated aggregate purchase
price (including adjustments for inflation) of approximately $11.9 billion at June 30,
2011 are as follows:

(dollars in thousands)

Years ending December 31,

2011

$

1,289,930

2012

1,817,592

2013

1,210,000

2014

1,408,662

2015

1,381,692

Thereafter

4,756,915

Total

$

11,864,791

We have made non-refundable deposits on the aircraft for which we have commitments
to purchase of $319.1 million and $183.4 million as of June 30, 2011 and December 31,
2010, respectively. If we are unable to satisfy our purchase commitments we may be forced
to forfeit our deposits. Further, we would be exposed to breach of contract claims by our
lessees and manufacturers.

The Companys lease for office space provides for step rentals over the term of the
lease. Those rentals are considered in the evaluation of recording rent expense on a
straight-line basis over the term of the lease. Tenant improvement allowances received
from the lessor are deferred and amortized in selling, general and administrative
expenses against rent expense. Commitments for minimum rentals under the non-cancelable
lease term at June 30, 2011 are as follows:

(dollars in thousands)

Years ending December 31,

2011

$



2012

1,441

2013

2,325

2014

2,395

2015

2,467

Thereafter

23,241

Total

$

31,869

5.

Net Earnings Per Share

Basic net earnings per share is computed by dividing net income (loss) by the weighted
average number of common shares outstanding for the period. Diluted earnings per share
reflects the potential dilution that would occur if securities or other contracts to issue
common stock were exercised or converted into common stock; however, potential common
equivalent shares are excluded if the effect of including these shares would be
anti-dilutive. The Companys two classes of common stock, Class A and Class B Non-Voting,
have equal rights to dividends and income, and therefore, basic and diluted earnings per
share are the same for each class of common stock.

Diluted net earnings per share takes into account the potential conversion of stock options,
restricted stock units and warrants using the treasury stock method. For the three months
ended June 30, 2011 and 2010, the Company excluded 3,375,908 and 2,450,000 shares related to
stock options which are potentially dilutive securities from the computation of diluted
earnings per share because including these shares would be anti-dilutive. For the six months
ended June 30, 2011 and the period from inception to June 30, 2010, the Company excluded
3,375,908 and 2,450,000 shares related to stock options which are potentially dilutive
securities from the computation of diluted earnings per share because including these shares
would be anti-dilutive. In addition, the Company excluded 2,613,989 and 2,450,000 shares
related to restricted stock units for which the performance metric had yet to be achieved as
of June 30, 2011 and 2010, respectively.

The following table sets forth the reconciliation of basic and diluted net income (loss) per
share:

For the three months endedJune 30,

For the six
months ended
June 30,

For the period
from Inception to
June 30,

(in thousands, except share data)

2011

2010

2011

2010

Numerator:

Net income (loss) available to common shareholdersbasic and
diluted EPS

Assets and Liabilities Measured at Fair Value on a Recurring and
Non-recurring Basis

The Company had no assets or liabilities which are measured at fair value on a recurring
or non-recurring basis as of June 30, 2011 or December 31, 2010.

b.

Fair Value of Financial Instruments

The carrying value reported on the balance sheet for cash and cash equivalents,
restricted cash and other payables approximates their fair value.

The fair value of debt financing is estimated based on the quoted market prices for the
same or similar issues, or on the current rates offered to the Company for debt of the
same remaining maturities. The estimated fair value of debt financing as of June 30, 2011
was $1,396.7 million compared to a book value of $1,383.6 million. The estimated fair value
of debt financing as of December 31, 2010 was $931.2 million compared to a book value of
$912.0 million.

7.

Equity Based Compensation

In accordance with the Amended and Restated Air Lease Corporation 2010 Equity Incentive Plan (the Plan), the
maximum number of shares of Common Stock that may be issued under the Plan, including in settlement of Stock Options (Stock Options) and Restricted
Stock Units (RSUs),
is
approximately 8,193,088 shares as of June 30, 2011. From inception of the Plan through June 30, 2011, the Company had granted
3,375,908 Stock Options and 3,457,964 RSUs.

The Company recorded $11.8 million and $2.3 million of stock-based compensation expense for
the three months ended June 30, 2011 and 2010, respectively. Stock-based compensation expense
for the six months ended June 30, 2011 and the period from inception to June 30, 2010,
totaled $22.7 million and $2.3 million, respectively.

a.

Stock Options

The Company uses the Black-Scholes option pricing model to determine the fair value of
stock options. The fair value of stock-based payment awards on the date of grant is
determined by an option-pricing model using a number of complex and subjective variables.
These variables include expected stock price volatility over the term of the awards,
actual and projected employee stock option exercise behaviors, a risk-free interest rate
and expected dividends.

Estimated volatility of the Companys common stock for new grants is determined by using
historical volatility of the Companys peer group. Due to our limited operating history,
there is no historical exercise data to provide a reasonable basis which the Company can
use to estimate expected terms. Accordingly, the Company uses the simplified method as
permitted under Staff Accounting Bulletin No. 110. The risk-free interest rate used in
the option valuation model is derived from U.S. Treasury zero-coupon issues with
remaining terms similar to the expected term on the options. The Company does not
anticipate paying any cash dividends in the foreseeable future and therefore uses an
assumed dividend yield of zero in the option valuation model. In accordance with ASC
Topic 718, Compensation Stock Compensation, the Company estimates forfeitures at the
time of grant and revises those estimates in subsequent periods if actual forfeitures
differ from those estimates. The average assumptions used to value stock-based payments
are as follows:

A summary of Stock Option activity in accordance with the Plan as
of June 30, 2011 and 2010, and changes for the six-month period and the period from
inception then ended follows:

Remaining

Aggregate

Exercise

concractual term

intrinsic value

Shares

price

(in years)

(in thousands)

Options outstanding at inception



Granted

2,450,000

$

20.00

9.9

Exercised



Cancelled



Options outstanding at June 30, 2010

2,450,000

$

20.00

9.9

Options exercisable at June 30, 2010



Options outstanding at January 1, 2011

3,225,908

$

20.00

9.5

$

1,612

Granted

150,000

28.80

9.8

Exercised



Cancelled



Options outstanding at June 30, 2011

3,375,908

$

20.39

9.0

$

13,839

Options exercisable at June 30, 2011

1,125,292

$

20.00

9.0

$

4,828

The Company recorded $3.0 million and $0.6 million of stock-based compensation
expense related to employee Stock Options for the three months ended June 30, 2011 and
2010, respectively. Stock-based compensation expense related to employee Stock Options
for the six months ended June 30, 2011 and the period from inception to June 30, 2010,
totaled $5.8 million and $0.6 million, respectively.

b.

Restricted Stock Unit Plan

The following is a summary of activity relating to RSUs:

For the six

For the period

For the three months ended

months ended

from Inception to

June 30,

June 30,

June 30,

2011

2010

2011

2010

Beginning restricted stock units

3,225,907



3,225,907



Shares awarded

232,057

2,450,000

232,057

2,450,000

Shares vested

(843,975

)



(843,975

)



Shares forfeited









Ending restricted stock units

2,613,989

2,450,000

2,613,989

2,450,000

At June 30, 2011, the outstanding RSUs are expected to vest as follows:
2012895,477; 2013874,530; 2014843,982. The Company recorded $8.7 million and $1.7
million of stock-based compensation expense related to RSUs for the three months ended
June 30, 2011 and 2010, respectively. Stock-based compensation expense related to RSUs
for the six months ended June 30, 2011 and the period from inception to June 30, 2010,
totaled $16.9 million and $1.7 million, respectively.

As of June 30, 2011, there was $59.4 million of unrecognized compensation cost, adjusted for
estimated forfeitures, related to unvested stock-based payments granted to employees. Total
unrecognized compensation cost will be adjusted for future changes in estimated forfeitures
and is expected to be recognized over a weighted average remaining period of 2.6 years.

8.

Subsequent Events

During July 2011, one of our wholly-owned subsidiaries entered into a twelve-year $70.9 million
secured term facility, with recourse to the Company, at a floating rate of LIBOR plus 1.50%. In
addition, the Company entered into two separate fixed-rate amortizing unsecured facilities including a
five-year $5.0 million facility with an interest rate of 3.85% and a three-year $35.0 million facility with an interest rate of 3.25%.

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-looking Information

This quarterly report on Form 10-Q and other publicly available documents may contain or
incorporate statements that constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this
Form 10-Q and include statements regarding, among other matters, the state of the airline industry,
our access to the capital markets, our ability to restructure leases and repossess aircraft, the
structure of our leases, regulatory matters pertaining to compliance with governmental regulations
and other factors affecting our financial condition or results of operations. Words such as
expects, anticipates, intends, plans, believes, seeks, estimates and should, and
variations of these words and similar expressions, are used in many cases to identify these
forward-looking statements. Any such forward-looking statements are not guarantees of future
performance and involve risks, uncertainties and other factors that may cause our actual results,
performance or achievements, or industry results to vary materially from our future results,
performance or achievements, or those of our industry, expressed or implied in such forward-looking
statements. Such factors include, among others, general industry, economic and business conditions,
which will, among other things, affect demand for aircraft, availability and creditworthiness of
current and prospective lessees, lease rates, availability and cost of financing and operating
expenses, governmental actions and initiatives, and environmental and safety requirements, as well
as the factors discussed under Part II  Item 1A. Risk Factors, in this Form 10-Q. We do not
intend and undertake no obligation to update any forward-looking information to reflect actual
results or future events or circumstances.

Overview

Our primary business is to acquire new and used popular and fuel-efficient commercial aircraft from
aircraft manufacturers and other parties and to lease those aircraft to airlines around the world.
We intend to supplement our leasing revenues by providing management services to investors and/or
owners of aircraft for which we would receive fee-based revenue. These services include
leasing, re-leasing, and lease management and sales services, with the goal of helping our clients
maximize lease and sale revenues. In addition to our leasing activities, and depending on market
conditions, we expect to sell aircraft from our fleet to other leasing companies, financial
services companies and airlines.

On April 25, 2011, we completed an initial public offering of our Class A Common Stock and listing
of our shares on the New York Stock Exchange under the symbol AL. The offering was upsized by 20%
and the underwriters exercised their over-allotment option in full, resulting in the sale of an
aggregate of 34,825,470 shares of Class A Common Stock. We received gross proceeds of approximately
$922.9 million.

On April 1, 2011, the Company executed an amendment to the Warehouse Facility that took effect on
April 21, 2011. This facility, as amended, provides us with financing of up to $1.25 billion,
modified from the original facility size of $1.5 billion. We are able to draw on this facility, as
amended, during an availability period that ends in June 2013. Prior to the amendment of the
Warehouse Facility, the Warehouse Facility accrued interest during the availability period based on
LIBOR plus 3.25% on drawn balances and at a rate of 1.00% on undrawn balances. Following the
amendment, the Warehouse Facility accrues interest during the availability period based on LIBOR
plus 2.50% on drawn balances and 0.75% on undrawn balances. Pursuant to the amendment, the advance
level under the facility was increased from 65.0% of the appraised value of the pledged aircraft
and 50.0% of the pledged cash to 70.0% of the appraised value of the pledged aircraft and 50.0% of
the pledged cash. The outstanding drawn balance at the end of the availability period may be
converted at our option to an amortizing, four-year term loan with an interest rate of LIBOR plus
3.25% for the initial three years of the term and margin step-ups during the remaining year that
increase the interest to LIBOR plus 4.75%. As a result of
amending the Warehouse Facility, we recorded an extinguishment of debt charge of $3.3 million from
the write-off of deferred debt issue costs when the amendment became effective on April 21, 2011.

In accordance with its obligations under the Registration Rights Agreement, dated June 4, 2010, by
and between our Company and FBR Capital Markets & Co, the Company filed with the Securities and
Exchange Commission a shelf registration statement through a Registration Statement on Form S-1
(File No. 333-173817). Once effective it is anticipated that the shelf registration statement will provide
for the resale of the following
registrable shares: (i) 61,810,867 shares of Class A Common Stock, including up to 482,625 shares
of Class A Common Stock issuable upon exercise of outstanding warrants and up to 1,829,339 shares
of Class A Common Stock issuable upon conversion of outstanding Class B Non-Voting Common Stock,
and (ii) 1,829,339 shares of Class B Non-Voting Common Stock.

We have continued to build one of the worlds youngest, most fuel-efficient operating lease
portfolios. During the six months ended June 30, 2011, we acquired an additional 25 aircraft ending
the period with a total of 65 aircraft (of which 13 were new aircraft and 52 were used aircraft)
and managed one aircraft. Our weighted average fleet age as of June 30, 2011 was 3.6 years.

Portfolio metrics of our fleet of 65 aircraft as of June 30, 2011 are as follows:

(dollars in thousands)

June 30, 2011

December 31, 2010

Fleet size

65

(1)

40

Weighted average fleet age

3.6 years

3.8 years

Weighted average remaining lease term

6.1 years

5.6 years

Aggregate fleet cost

$

2,876,962

$

1,649,071

(1)

We acquired our existing fleet of 65 aircraft from 14 separate owners and
operators of aircraft, 43 of which were subject to existing operating leases originated by
nine different aircraft lessors. The individual transactions ranged in size from one to eight
aircraft, and from $10.1 million to $330.2 million, respectively. The 43 existing operating
leases were with 34 different airline customers. Of the 43 aircraft that we acquired from
other aircraft lessors, none of the aircraft represented an entire portfolio (i.e., a group of
aircraft characterized by risk, geography or other common features) of the respective seller
lessor, and none of the seller lessors sold their aircraft as part of a plan to exit their
respective aircraft leasing businesses. With respect to these transactions, we did not acquire
any information technology systems, infrastructure, employees, other assets, services,
financing or any other activities indicative of a business.

The following table sets forth the number of
aircraft we leased to customers in the indicated regions as of
June 30, 2011 and December 31, 2010:

June 30, 2011

December 31, 2010

Number of

% of

Number of

% of

aircraft

total

aircraft

total

Europe

24

36.9

%

16

40.0

%

Asia/Pacific

22

33.9

11

27.5

Central America, South America and Mexico

8

12.3

5

12.5

U.S. and Canada

8

12.3

5

12.5

The Middle East and Africa

3

4.6

3

7.5

Total

65

100.0

%

40

100.0

%

The following table sets forth the number of aircraft we leased to customers by aircraft type as of June
30, 2011 and December 31, 2010:

June 30, 2011

December 31, 2010

Number of

% of

Number of

% of

aircraft

total

aircraft

total

Airbus A319-100

7

10.8

%

7

17.5

%

Airbus A320-200

16

24.6

8

20.0

Airbus A321-200

3

4.6

2

5.0

Airbus A330-200

5

7.7

2

5.0

Boeing 737-700

5

7.7

5

12.5

Boeing 737-800

24

36.9

14

35.0

Boeing 767-300ER

1

1.5



0.0

Boeing 777-300ER

4

6.2

2

5.0

Total

65

100.0

%

40

100.0

%

We continue to evaluate opportunities to acquire attractive aircraft
in order to grow our fleet to approximately 100 aircraft by the end of 2011.

During the second quarter of 2011, we entered into commitments to acquire up to 83 additional
aircraft from Airbus, Boeing and Embraer for an estimated aggregate purchase price (including
adjustment for anticipated inflation) of approximately $5.0 billion. Deliveries of the additional
aircraft are scheduled to commence in 2012 and to continue through
2020. From Airbus, we agreed to
purchase one additional Airbus A321 aircraft and entered into a non-binding memorandum of understanding for the purchase of 50 Airbus A320/321 NEO aircraft and we have
cancellation rights with respect to 14 of the 50 A320/321 NEO aircraft. From Boeing, we agreed to
purchase an additional 18 Boeing 737-800
aircraft, and entered into memoranda of understanding for the purchase of five Boeing 777-
300ER aircraft and four Boeing 787-9 aircraft and have cancellation rights with respect to four of
the additional 18 Boeing 737-800 aircraft. From Embraer, we agreed to purchase an additional five
Embraer E190 aircraft.

As of June 30, 2011, we had contracted to buy 234 new and nine used aircraft at an estimated
aggregate purchase price (including adjustments for inflation) of approximately $11.9 billion for
delivery as follows:

Aircraft Type

2011(1)

2012

2013

2014

2015

Thereafter

Total

Airbus A319-100

1











1

Airbus A320/321-200

5

10

13

12

7



47

Airbus A320/321 NEO(2)(3)











50

50

Airbus A330-200/300

6

6









12

Boeing 737-700

2











2

Boeing 737-800(2)

2

3

12

12

14

37

80

Boeing 767-300ER

2











2

Boeing 777-300ER(3)







2

3



5

Boeing 787-9(3)











4

4

Embraer E175/190

11

19









30

ATR 72-600

2

8









10

Total

31

46

25

26

24

91

243

(1)

Of the 31 aircraft that we will acquire in the remainder of 2011, the
following nine aircraft will be used aircraft: the A319-100, one A320-200, one A330-200, two
737-700s, both 737-800s and both 767-300ERs.

(2)

We have cancellation rights with respect to 14 of the Airbus A320/321 NEO aircraft
and four of the Boeing 737-800 aircraft.

(3)

As of June 30, 2011, the Airbus A320/321 NEO aircraft, the Boeing 777-300ER aircraft
and the Boeing 787-9 aircraft were subject to non-binding memoranda of understanding for the
purchase of said aircraft.

Our lease placements are progressing in line with expectations. As of June 30, 2011 we have
entered into contracts for the lease of new and used aircraft scheduled to be delivered as follows:

Number of

Number

Delivery year

aircraft

leased

% Leased

2011

31

31

100.0

%

2012

46

37

80.4

2013

25

14

56.0

2014

26

6

23.1

2015

24





Thereafter

91





Total

243

88

36.2

%

Debt financing

We fund our aircraft purchases with our existing cash balances, unsecured term and revolving credit
facilities, our Warehouse Facility and secured term financings. As of June 30, 2011, we borrowed
$709.3 million under our Warehouse Facility, $503.4 million in secured term debt and $170.9 million
in unsecured financing. As of June 30, 2011, we had accumulated a diverse lending group consisting
of 16 banks across four general types of lending facilities with a composite interest rate of
3.29%. This rate does not include the effect of upfront fees, undrawn fees or issuance cost
amortization. See Liquidity and capital resources below.

Our debt financing was comprised of the following:

(dollars in thousands)

June 30, 2011

December 31, 2010

Secured debt

$

1,212,671

$

778,896

Unsecured debt

170,899

133,085

Total

$

1,383,570

$

911,981

Composite interest rate (1)

3.29

%

3.32

%

(1)

This rate does not include the effect of upfront fees, undrawn fees or issuance cost amortization.

At June 30, 2011, we were in compliance in all material respects with the covenants in our
debt agreements, including our financial covenants concerning debt-to-equity, tangible net equity
and interest coverage ratios.

Our revenues are principally derived from operating leases with scheduled and charter airlines. As
of June 30, 2011, we derived more than 90% of our revenues from airlines domiciled outside of the
United States, and we anticipate that most of our revenues in the future will be generated from
foreign lessees. The airline industry is cyclical, economically sensitive, and highly competitive.
Airlines and related companies are affected by fuel price volatility and fuel shortages, political
and economic instability, natural disasters, terrorist activities, changes in national policy,
competitive pressures, labor actions, pilot shortages, insurance costs, recessions, health concerns
and other political or economic events adversely affecting world or regional trading markets. Our
airline customers ability to react to and cope with the volatile competitive environment in which
they operate, as well as our own competitive environment, will affect our revenues and income.

We are optimistic about the long-term future of air transportation and, more specifically, the
growing role that the leasing industry provides in facilitating the growth of commercial air
transport.

We have substantial cash requirements as we continue to expand our fleet through our purchase
commitments. However, we believe that we will have sufficient liquidity to satisfy the operating
requirements of our business through the next twelve months.

Our liquidity plans are subject to a number of risks and uncertainties, including those described
in Part IIItem 1A. Risk Factors, some of which are outside of our control. Macro-economic
conditions could hinder our business plans, which could, in turn, adversely affect our financing
strategy.

Warehouse Facility

During the second quarter of 2011, the Company drew $104.9 million under the Warehouse Facility and
incrementally pledged $163.1 million in aircraft collateral. As of June 30, 2011, the Company had
borrowed $709.3 million under the Warehouse Facility and had pledged 28 aircraft as collateral with
a net book value of $1.2 billion. As of December 31, 2010, the Company had borrowed $554.9 million
under the Warehouse Facility and had pledged 23 aircraft as collateral with a net book value of
$930.0 million. The Company had pledged cash collateral and lessee deposits of $67.5 million and
$48.3 million at June 30, 2011 and December 31, 2010, respectively. The Company had $540.8 million
and $945.1 million available but undrawn under our Warehouse Facility as of June 30, 2011 and
December 31, 2010, respectively.

Secured term financing

During the second quarter of 2011, two of our wholly-owned subsidiaries entered into two separate
secured term facilities aggregating $82.8 million. The two facilities consisted of a three-year
$20.3 million facility at a floating rate of LIBOR plus 2.75% and a $62.5 million facility with a
eight-year $56.0 million tranche at a rate of LIBOR plus 2.99% and a two-year $6.5 million tranche
at a rate of LIBOR plus 2.10%. In connection with these facilities, the Company pledged $129.0
million in aircraft collateral.

The outstanding balances on these facilities were $503.4 million and $224.0 million at June 30,
2011 and December 31, 2010, respectively.

Unsecured financing

During the second quarter of 2011, the Company issued $120.0 million in senior unsecured notes in a
private placement to institutional investors. The notes have a five-year term and a coupon of 5.0%.
In addition, we entered into two five-year and one three-year unsecured term facilities totaling
$17.0 million with interest rates ranging from 3.0% to 4.0%.

We ended the second quarter of 2011 with a total of nine unsecured term facilities. The total
amount outstanding under our unsecured term facilities was $170.9 million and $13.1 million as of
June 30, 2011 and December 31, 2010, respectively.

In addition, we increased the capacity of one of our existing three-year revolving unsecured credit
facilities from $25.0 million to $30.0 million. The Company ended the second quarter of 2011 with a
total of 12 bilateral revolving unsecured credit facilities aggregating $313.0 million, each with a
borrowing rate of LIBOR plus 2.00%. We did not have any amounts outstanding under our bilateral
revolving unsecured credit facilities as of June 30, 2011 compared to $120.0 million outstanding as
of December 31, 2010.

Contractual Obligations

Our contractual obligations as of June 30, 2011 are as follows:

(dollars in thousands)

2011

2012

2013

2014

2015

Thereafter

Total

Long-term debt obligations (1)

$

35,063

$

71,637

$

204,764

$

220,973

$

228,611

$

622,522

$

1,383,570

Interest payments on debt outstanding (2)

25,465

48,773

43,497

33,913

27,212

20,391

199,251

Purchase commitments

1,289,930

1,817,592

1,210,000

1,408,662

1,381,692

4,756,915

11,864,791

Operating leases



1,441

2,325

2,395

2,467

23,241

31,869

Total

$

1,350,458

$

1,939,443

$

1,460,586

$

1,665,943

$

1,639,982

$

5,423,069

$

13,479,481

(1)

As of June 30, 2011, the Company had $709.3 million of debt outstanding under the Warehouse
Facility which will come due beginning in June 2013. The outstanding drawn balance at the end of the availability period
may be converted at the Companys option to an amortizing, four-year term loan with an increasing interest rate and has been
presented as if such option were exercised in the contractual obligation schedule, above.

(2)

Future interest payments on floating rate debt are estimated using floating rates in effect at June 30, 2011.

Results of Operations

For the six

For the period

For the three months ended

months ended

from Inception to

June 30,

June 30,

June 30,

(in thousands, except share data)

2011

2010

2011

2010

Revenues

Rental of flight equipment

$

74,004

$

1,235

$

128,616

$

1,235

Interest and other

340

474

943

474

Total revenues

74,344

1,709

129,559

1,709

Expenses

Interest

10,090

1,838

19,150

1,838

Amortization of deferred debt issue costs

2,336

875

4,664

875

Extinguishment of debt

3,349



3,349



Amortization of convertible debt discounts



35,798



35,798

Interest expense

15,775

38,511

27,163

38,511

Depreciation of flight equipment

24,644

327

42,774

327

Selling, general and administrative

11,284

5,759

21,149

6,236

Stock-based compensation

11,753

2,255

22,660

2,255

Total expenses

63,456

46,852

113,746

47,329

Income (loss) before taxes

10,888

(45,143

)

15,813

(45,620

)

Income tax (expense) benefit

(3,865

)

4,002

(5,614

)

4,002

Net income (loss)

$

7,023

$

(41,141

)

$

10,199

$

(41,618

)

Other Financial Data

Adjusted net income (loss) (1)

$

19,459

$

(3,315

)

$

31,172

$

(3,792

)

Adjusted EBITDA (2)

$

62,780

$

3,550

$

108,029

$

3,073

(1)

Adjusted net income (loss) (defined as net income before stock-based
compensation expense and non-cash interest expense, which includes the amortization of debt
issuance costs and extinguishment of debt) is a measure of both operating performance and
liquidity that is not defined by GAAP and should not be considered as an alternative to net
income (loss), income from operations or any other performance measures derived in accordance
with GAAP. Adjusted net income (loss) is presented as a supplemental disclosure because
management believes that it may be a useful performance measure that is used within our
industry. We believe adjusted net income (loss) provides useful information on our earnings
from ongoing operations, our ability to service our long-term debt and other fixed
obligations, and our ability to fund our expected growth with internally generated funds. Set
forth below is additional detail as to how we use adjusted net income (loss) as a measure of
both operating performance and liquidity, as well as a discussion of the limitations of
adjusted net income (loss) as an analytical tool and a reconciliation of adjusted net income
(loss) to our GAAP net income (loss) and cash flow from operating activities.

Operating Performance: Management and our board of directors use adjusted net income (loss) in a
number of ways to assess our consolidated financial and operating performance, and we believe
this measure is helpful in identifying trends in our performance. We use adjusted net income
(loss) as a measure of our

consolidated operating performance exclusive of income and expenses
that relate to the financing, income taxes, and capitalization of the business. Also, adjusted
net income (loss) assists us in comparing our operating performance on a consistent basis as it
removes the impact of our capital structure (primarily one-time amortization of convertible debt
discounts and extinguishment of debt) and stock-based compensation expense from our operating
results. In addition, adjusted net income (loss) helps management identify controllable expenses
and make decisions designed to help us meet our current financial goals and optimize our
financial performance. Accordingly, we believe this metric measures our financial performance
based on operational factors that we can influence in the short term, namely the cost structure
and expenses of the organization.

Liquidity: In addition to the uses described above, management and our board of directors use
adjusted net income as an indicator of the amount of cash flow we have available to service our
debt obligations, and we believe this measure can serve the same purpose for our investors.

Limitations: Adjusted net income (loss) has limitations as an analytical tool, and you should not
consider it in isolation, or as a substitute for analysis of our operating results or cash flows
as reported under GAAP. Some of these limitations are as follows:



adjusted net income (loss) does not reflect (i) our cash expenditures or future
requirements for capital expenditures or contractual commitments, or (ii) changes in or
cash requirements for our working capital needs; and



our calculation of adjusted net income (loss) may differ from the adjusted net income
(loss) or analogous calculations of other companies in our industry, limiting its
usefulness as a comparative measure.

The following tables show the reconciliation of net income (loss) and cash flows from operating
activities, the most directly comparable GAAP measures of performance and liquidity, to adjusted
net income (loss) for three months ended June 30, 2011 and 2010, the six months ended June 30,
2011 and the period from inception to June 30, 2010:

For the six months

For the period

For the three months ended

ended

from Inception to

June 30,

June 30,

June 30,

(in thousands)

2011

2010

2011

2010

Reconciliation of cash flows from operating activities to adjusted net income (loss):

Net cash provided by operating activities

$

48,483

$

209

$

87,032

$

2,019

Depreciation of flight equipment

(24,644

)

(327

)

(42,774

)

(327

)

Stock-based compensation

(11,753

)

(2,255

)

(22,660

)

(2,255

)

Deferred taxes

(3,866

)

4,002

(5,614

)

4,002

Amortization of deferred debt issue costs

(2,336

)

(875

)

(4,664

)

(875

)

Extinguishment of debt

(3,349

)



(3,349

)



Amortization of convertible debt discounts



(35,798

)



(35,798

)

Changes in operating assets and liabilities:

Lease receivables and other assets

14,042

1,094

16,327

1,199

Accrued interest and other payables

(5,904

)

(5,032

)

(6,932

)

(7,424

)

Rentals received in advance

(3,650

)

(2,159

)

(7,167

)

(2,159

)

Net income (loss)

7,023

(41,141

)

10,199

(41,618

)

Amortization of debt issue costs

2,336

875

4,664

875

Extinguishment of debt

3,349



3,349



Amortization of convertible debt discounts



35,798



35,798

Stock-based compensation

11,753

2,255

22,660

2,255

Tax effect

(5,002

)

(1,102

)

(9,700

)

(1,102

)

Adjusted net income (loss)

$

19,459

$

(3,315

)

$

31,172

$

(3,792

)

For the six months

For the period

For the three months ended

ended

from Inception to

June 30,

June 30,

June 30,

(in thousands)

2011

2010

2011

2010

Reconciliation of net income (loss) to adjusted net income (loss):

Net income (loss)

$

7,023

$

(41,141

)

$

10,199

$

(41,618

)

Amortization of debt issue costs

2,336

875

4,664

875

Extinguishment of debt

3,349



3,349



Amortization of convertible debt discounts



35,798



35,798

Stock-based compensation

11,753

2,255

22,660

2,255

Tax effect

(5,002

)

(1,102

)

(9,700

)

(1,102

)

Adjusted net income (loss)

$

19,459

$

(3,315

)

$

31,172

$

(3,792

)

(2)

Adjusted EBITDA (defined as net income (loss) before net interest expense,
extinguishment of debt, stock-based compensation expense, income tax (expense) benefit, and
depreciation and amortization expense) is a measure of both operating performance and
liquidity that is not defined by GAAP and should not be considered as an alternative to net
income (loss), income from operations or any other performance measures derived in accordance
with GAAP. Adjusted EBITDA is presented as a supplemental disclosure because management
believes that it may be a useful performance measure that is used within our industry. We
believe adjusted EBITDA provides useful information on our earnings from ongoing operations,
our ability to service our long-term debt and other fixed obligations, and our ability to fund
our expected growth with internally generated funds. Set forth below is additional detail as
to how we use adjusted EBITDA as a measure of both operating performance and liquidity, as
well as a discussion of the limitations of adjusted EBITDA as an analytical tool and a
reconciliation of adjusted EBITDA to our GAAP net loss and cash flow from operating
activities.

Operating Performance: Management and our board of directors use adjusted EBITDA in a number of
ways to assess our consolidated financial and operating performance, and we believe this measure
is helpful in identifying trends in our performance. We use adjusted EBITDA as a measure of our
consolidated operating performance exclusive of income and expenses that relate to the financing,
income taxes, and capitalization of the business. Also, adjusted EBITDA assists us in comparing
our operating performance on a consistent basis as it removes the impact of our capital structure
and stock-based compensation expense from our operating results. In addition, adjusted EBITDA
helps management identify controllable expenses and make decisions designed to help us meet our
current financial goals and optimize our financial performance. Accordingly, we believe this
metric measures our financial performance based on operational factors that we can influence in
the short term, namely the cost structure and expenses of the organization.

Liquidity: In addition to the uses described above, management and our board of directors use
adjusted EBITDA as an indicator of the amount of cash flow we have available to service our debt
obligations, and we believe this measure can serve the same purpose for our investors.

Limitations: Adjusted EBITDA has limitations as an analytical tool, and you should not consider
it in isolation, or as a substitute for analysis of our operating results or cash flows as
reported under GAAP. Some of these limitations are as follows:

adjusted EBITDA does not reflect changes in or cash requirements for our working
capital needs;



adjusted EBITDA does not reflect interest expense or cash requirements necessary to
service interest or principal payments on our debt; and



other companies in our industry may calculate these measures differently from how we
calculate these measures, limiting their usefulness as comparative measures.

The following tables show the reconciliation of net income (loss) and cash flows from operating
activities, the most directly comparable GAAP measures of performance and liquidity, to adjusted
EBITDA for the three months ended June 30, 2011 and 2010, the six months ended June 30, 2011 and
the period from inception to June 30, 2010:

For the six months

For the period

For the three months ended

ended

from Inception to

June 30,

June 30,

June 30,

(in thousands)

2011

2010

2011

2010

Reconciliation of cash flows from operating activities to adjusted EBITDA:

Net cash provided by operating activities

$

48,483

$

209

$

87,032

$

2,019

Depreciation of flight equipment

(24,644

)

(327

)

(42,774

)

(327

)

Stock-based compensation

(11,753

)

(2,255

)

(22,660

)

(2,255

)

Deferred taxes

(3,866

)

4,002

(5,614

)

4,002

Amortization of deferred debt issue costs

(2,336

)

(875

)

(4,664

)

(875

)

Extinguishment of debt

(3,349

)



(3,349

)



Amortization of convertible debt discounts



(35,798

)



(35,798

)

Changes in operating assets and liabilities:

Lease receivables and other assets

14,042

1,094

16,327

1,199

Accrued interest and other payables

(5,904

)

(5,032

)

(6,932

)

(7,424

)

Rentals received in advance

(3,650

)

(2,159

)

(7,167

)

(2,159

)

Net income (loss)

7,023

(41,141

)

10,199

(41,618

)

Net interest expense

15,495

38,107

26,782

38,107

Income taxes

3,865

4,002

5,614

4,002

Depreciation

24,644

327

42,774

327

Stock-based compensation

11,753

2,255

22,660

2,255

Adjusted EBITDA

$

62,780

$

3,550

$

108,029

$

3,073

For the six months

For the period

For the three months ended

ended

from Inception to

June 30,

June 30,

June 30,

(in thousands)

2011

2010

2011

2010

Reconciliation of net income (loss) to adjusted EBITDA:

Net income (loss)

$

7,023

$

(41,141

)

$

10,199

$

(41,618

)

Net interest expense

15,495

38,107

26,782

38,107

Income taxes

3,865

4,002

5,614

4,002

Depreciation

24,644

327

42,774

327

Stock-based compensation

11,753

2,255

22,660

2,255

Adjusted EBITDA

$

62,780

$

3,550

$

108,029

$

3,073

Three months ended June 30, 2011, compared to the three months ended June 30, 2010

Rental revenue

Building on our base of 49 aircraft at March 31, 2011, we acquired sixteen aircraft during the
three months ended June 30, 2011. As of June 30, 2011, we had acquired 65 aircraft at a total cost
of $2.9 billion and recorded $74.0 million in rental revenue for the three months then ended, which
includes overhaul revenue of $2.6 million. As of June 30, 2010, we had acquired eight aircraft at a
total cost of $319.6 million and recorded $1.2 million in rental revenue for the three months ended
June 30, 2010, which includes overhaul revenue of $0.2 million. The increase in rental revenue for
the three months ended June 30, 2011, compared to 2010, was attributable to the acquisition and
lease of additional aircraft. The full impact on rental revenue for aircraft acquired during the
quarter will be reflected in subsequent periods.

All of the aircraft in our fleet were leased as of June 30, 2011 and 2010.

Interest expense

Interest expense totaled $15.8 million and $38.5 million for the three months ended June 30, 2011
and 2010, respectively. The change was primarily due to an increase in our outstanding debt
balances resulting in an $8.3 million increase in interest, an increase of $1.5 million in
amortization of our deferred debt issue costs and a $3.3 million charge for the extinguishment of
debt associated with the modification of the Warehouse Facility, offset by a one-time $35.8 million
charge for the amortization of convertible debt discounts recorded during the second quarter of
2010. The amortization of convertible debt discounts was a one-time, equity-neutral charge. This
charge was a result of our issuance of $60.0 million of convertible notes at 6.0%, on May 7, 2010,
to funds managed by Ares Management LLC and Leonard Green & Partners, L.P. and members of our
management and board of

directors (and their family members or affiliates) and simultaneously
entering into a forward purchase arrangement with such funds managed by Ares Management LLC and
Leonard Green & Partners, L.P. to purchase shares at a discounted price of $18.00 per share. We
used the proceeds of the convertible notes to finance the acquisition of an aircraft and for
general corporate purposes prior to the initial closing of our private placement of Common Stock in
June 2010. The convertible notes all converted to equity at $18.00 per share on June 4, 2010, upon
the initial closing of our private placement of Common Stock in June 2010.

We expect that our interest expense will increase as our average debt balance outstanding continues
to increase.

Our overall composite interest rate has continued to improve since our inception. This is a result
of our credit spreads on new debt issuances continuing to tighten, combined with the effects of an
extended low short-term interest rate environment.

Depreciation expense

We recorded $24.6 million in depreciation expense of flight equipment for the three months ended
June 30, 2011 compared to $0.3 million for the three months ended June 30, 2010. The increase in
depreciation expense for 2011, compared to 2010, was attributable to the acquisition of additional
aircraft. The full impact on depreciation expense for aircraft added during the quarter will be
reflected in subsequent periods.

Selling, general and administrative expenses

We recorded selling, general and administrative expenses of $11.3 million and $5.8 million for the
three months ended June 30, 2011 and 2010, respectively. Selling, general and administrative
expense represents a disproportionately higher percentage of revenues during our initial years of
operation. As we continue to add new aircraft to our portfolio, we expect selling, general and
administrative expense to continue decreasing as a percentage of our revenue.

Stock-based compensation expense

Stock-based compensation expense totaled $11.8 million and $2.3 million for the three months ended
June 30, 2011 and 2010, respectively. This increase is primarily a result of timing as the full
impact on stock-based compensation expense of grants made during the second quarter of 2010, which
were not reflected until subsequent periods. We determine the fair value of our grants on the grant
date and will recognize the value of the grants as expense over the vesting period, with an
offsetting increase to equity. As a result, the stock-based compensation expense recorded to date
is equity-neutral.

Taxes

The effective tax rate for the three months ended June 30, 2011 was 35.5% compared to 8.8% for the
period from inception to June 30, 2010. The change in effective tax rate for the respective periods
is due to the effect of the one-time charge of $35.8 million relating to the amortization of
convertible debt discounts in the prior period which is not deductible for tax purposes.

Net income (loss)

For the three months ended June 30, 2011, the Company reported consolidated net income of $7.0
million, or $0.08 per diluted share, compared to a consolidated net loss of $41.1 million, or $2.37
per diluted share, for the three months ended June 30, 2010. The increase in net income for 2011,
compared to 2010, was primarily attributable to the acquisition and lease of additional aircraft
and the effect of a one-time $35.8 million charge for the
amortization of convertible debt discounts recorded during the second quarter of 2010.

Adjusted net income (loss)

We recorded adjusted net income of $19.5 million for the three-month period ended June 30, 2011
compared to an adjusted net loss of $3.3 million for the three-month period ended June 30, 2010.
The change in adjusted net income (loss) for 2011, compared to 2010, was primarily attributable to
the acquisition and lease of additional aircraft..

Adjusted net income is a measure of financial and operational performance that is not defined by
GAAP. See note 1 under the Results of Operations table above for a discussion of adjusted net
income as a non-GAAP measure and a reconciliation of this measure to net income.

Six months ended June 30, 2011, compared to the period from inception to June 30, 2010

Rental revenue

Building on our base of 40 aircraft at December 31, 2010, we acquired twenty-five aircraft during
the six months ended June 30, 2011. As of June 30, 2011, we had acquired 65 aircraft at a total
cost of $2.9 billion and recorded $128.6 million in rental revenue for the six months then ended,
which includes overhaul revenue of $4.3 million. As of June 30, 2010, we had acquired eight
aircraft at a total cost of $319.6 million and recorded $1.2 million in rental revenue for the
period from inception to June 30, 2010, which includes overhaul revenue of $0.2 million. The
increase in rental revenue for 2011, compared to 2010, was attributable to the acquisition and
lease of additional aircraft. The full impact on rental revenue for aircraft acquired during the
quarter will be reflected in subsequent periods.

All of the aircraft in our fleet were leased as of June 30, 2011 and 2010.

Interest expense

Interest expense totaled $27.2 million and $38.5 million for the six months ended June 30, 2011 and
the period from inception to June 30, 2010, respectively. The change was primarily due to an
increase in our outstanding debt balances resulting in a $17.3 million increase in interest, an
increase of $3.8 million in amortization of our deferred debt issue costs and a $3.3 million charge
for the extinguishment of debt associated with the modification of the Warehouse Facility, offset
by a one-time $35.8 million charge for the amortization of convertible debt discounts recorded
during the second quarter of 2010. The amortization of convertible debt discounts was a one-time,
equity-neutral charge. This charge was a result of our issuance of $60.0 million of convertible
notes at 6.0%, on May 7, 2010, to funds managed by Ares Management LLC and Leonard Green &
Partners, L.P. and members of our management and board of directors (and their family members or
affiliates) and simultaneously entering into a forward purchase arrangement with such funds managed
by Ares Management LLC and Leonard Green & Partners, L.P. to purchase shares at a discounted price
of $18.00 per share. We used the proceeds of the convertible notes to finance the acquisition of an
aircraft and for general corporate purposes prior to the initial closing of our private placement
of Common Stock in June 2010. The convertible notes all converted to equity at $18.00 per share on
June 4, 2010, upon the initial closing of our private placement of Common Stock in June 2010.

We expect that our interest expense will increase as our average debt balance outstanding continues
to increase.

Our overall composite interest rate has continued to improve since our inception. This is a result
of our credit spreads on new debt issuances continuing to tighten, combined with a low short-term
interest rate environment.

Depreciation expense

We recorded $42.8 million in depreciation expense of flight equipment for the six months ended June
30, 2011 compared to $0.3 million for the period from inception to June 30, 2010. The increase in
depreciation expense for 2011, compared to 2010, was attributable to the acquisition and lease of
additional aircraft. The full impact on depreciation expense for aircraft added during the quarter
will be reflected in subsequent periods.

Selling, general and administrative expenses

We recorded selling, general and administrative expenses of $21.1 million and $6.2 million for the
six months ended June 30, 2011 and the period from inception to June 30, 2010, respectively.
Selling, general and administrative expense represents a disproportionately higher percentage of
revenues during our initial years of operation. As we continue to add new aircraft to our
portfolio, we expect selling, general and administrative expense to continue decreasing as a
percentage of our revenue.

Stock-based compensation expense

Stock-based compensation expense totaled $22.7 million and $2.3 million for the six months ended
June 30, 2011 and the period from inception to June 30, 2010, respectively. This increase is
primarily a result of timing as the full impact on stock-based compensation expense for grants made
during the second quarter of 2010, which were not reflected until subsequent periods. We determine
the fair value of our grants on the grant date and will recognize the value of the grants as
expense over the vesting period, with an offsetting increase to equity. As a result, the
stock-based compensation expense recorded to date is equity-neutral.

The effective tax rate for the six months ended June 30, 2011 was 35.5% compared to 8.8% for the
period from inception to June 30, 2010. The change in effective tax rate for the respective periods
is due to the effect of the one-time charge of $35.8 million relating to the amortization of
convertible debt discounts in the prior period which is not deductible for tax purposes.

Net income (loss)

For the six months ended June 30, 2011, the Company reported consolidated net income of $10.2
million, or $0.13 per diluted share, compared to a consolidated net loss of $41.6 million, or $4.17
per diluted share, for the period from inception to June 30, 2010. The increase in net income for
2011, compared to 2010, was primarily attributable to the acquisition and lease of additional
aircraft and the effect of a one-time $35.8 million charge for the
amortization of convertible debt discounts recorded during the second quarter of 2010.

Adjusted net income (loss)

We recorded adjusted net income of $31.2 million for the six-month period ended June 30, 2011
compared to an adjusted net loss of $3.8 million for the period from inception to June 30, 2010.
The change in adjusted net income (loss) for 2011, compared to 2010, was primarily attributable to
the acquisition and lease of additional aircraft..

Adjusted net income is a measure of financial and operational performance that is not defined by
GAAP. See note 1 under the Results of Operations table above for a discussion of adjusted net
income as a non-GAAP measure and a reconciliation of this measure to net income.

Off-Balance Sheet Arrangements

We have not established any unconsolidated entities for the purpose of facilitating
off-balance sheet arrangements or for other contractually narrow or limited purposes. We have,
however, from time to time established subsidiaries and created partnership arrangements or trusts
for the purpose of leasing aircraft or facilitating borrowing arrangements.

Critical accounting policies

The Companys critical accounting policies reflecting managements estimates and judgments are
described in our final prospectus filed with the Securities and Exchange Commission on April 19,
2011 pursuant to Rule 424(b).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of changes in value of a financial instrument, caused by
fluctuations in interest rates and foreign exchange rates. Changes in these factors could cause
fluctuations in our results of operations and cash flows. We are exposed to the market risks
described below.

Interest Rate Risk

The nature of our business exposes us to market risk arising from changes in interest rates.
Changes, both increases and decreases, in our cost of borrowing, as reflected in our composite
interest rate, directly impact our net income. Our lease rental stream is generally fixed over the
life of our leases, whereas we have used floating-rate debt to finance a significant portion of our
aircraft acquisitions. As of December 31, 2010, we had $898.9 million in floating-rate debt. As of
June 30, 2011, we had $1.0 billion in floating-rate debt. If interest rates increase, we would be
obligated to make higher interest payments to our lenders. If we incur significant fixed-rate debt
in the future, increased interest rates prevailing in the market at the time of the incurrence of
such debt would also increase our interest expense. If our composite rate were to increase by 1.0%,
we would expect to incur additional interest expense on our existing indebtedness as of December
31, 2010 and June 30, 2011 of approximately $9.0 million and $10.2 million, respectively, each on
an annualized basis, which would put downward pressure on our operating margins. The increase in
additional interest expense the Company would incur is primarily due to an increase in total
floating rate debt outstanding as of June 30, 2011 compared to December 31, 2010.

The Company attempts to minimize currency and exchange risks by entering into aircraft purchase
agreements and a majority of lease agreements and debt agreements with U.S. dollars as the
designated payment currency. Thus, most of our revenue and expenses are denominated in U.S.
dollars. As of December 31, 2010 and June 30, 2011, 3.7% and 4.7% respectively, of our lease
revenues were denominated in Euros. The increase in lease revenues denominated in Euros is
primarily due to the full impact on rental revenue of aircraft acquired in prior periods. As our
principal currency is the U.S. dollar, a continuing weakness in the U.S. dollar as compared to
other major currencies should not have a significant impact on our future operating results.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the periods specified in the rules and forms of the
Securities and Exchange Commission, and such information is accumulated and communicated to our
management, including the Chief Executive Officer and Chief Financial Officer (collectively, the
Certifying Officers), as appropriate, to allow timely decisions regarding required disclosure.
Our management, including the Certifying Officers, recognizes that any set of controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives.

We have evaluated, under the supervision and with the participation of management, including the
Certifying Officers, the effectiveness of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as of June 30, 2011. Based on
that evaluation, our Certifying Officers have concluded that our disclosure controls and procedures
were effective at the reasonable assurance level at June 30, 2011.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the six months
ended June 30, 2011, that have materially affected, or are reasonably likely to materially affect,
our internal controls over financial reporting.

From time to time, we may be involved in litigation and claims incidental to the conduct of our
business in the ordinary course. Our industry is also subject to scrutiny by government regulators,
which could result in enforcement proceedings or litigation related to regulatory compliance
matters. We are not presently a party to any enforcement proceedings, litigation related to
regulatory compliance matters, or any other type of litigation matters. We maintain insurance
policies in amounts and with the coverage and deductibles we believe are adequate, based on the
nature and risks of our business, historical experience and industry standards.

Item 1A. Risk Factors

There are no material changes to the risk factors disclosed in our final prospectus filed with the
Securities and Exchange Commission on April 19, 2011 pursuant to Rule 424(b).

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(b) Use of Proceeds from Registered Securities

Our initial public offering of Class A Common Stock was effected through a Registration Statement
on Form S-1 (File No. 333-171734) that was declared effective by the Securities and Exchange
Commission on April 8, 2011, which registered an aggregate of 34,825,470 shares of our Class A
Common Stock, including 4,542,450 shares of our Class A Common Stock related to the exercise of the
underwriters over-allotment option. On April 25, 2011, we sold 34,825,470 shares of Class A Common
Stock at an initial public offering price of $26.50 per share, for aggregate gross proceeds of
approximately $922.9 million. Such sale included all 4,542,450 shares subject to the underwriters
over-allotment option. Accordingly, the offering was completed on April 25, 2011.

In connection with our initial public
offering, we paid underwriting discounts and commissions to
the underwriters totaling approximately $50.8 million in connection with the offering. In addition,
we incurred expenses reasonably estimated to be approximately $3.6 million in connection with the
offering, which when added to the underwriting discounts paid by us, amount to total expenses of
approximately $54.8 million. Thus, the net offering proceeds to us, after deducting underwriting
discounts and offering expenses, were approximately $868.6 million. Approximately $0.9 million of
such underwriting discounts and commissions were paid to SG Americas Securities, LLC. Michel
M.R.G. Péretié, a director of the Company, is the Chief Executive Officer of Société Générale
Corporate & Investment Banking, an affiliate of SG Americas Securities, LLC.

There are no material changes in the use of proceeds from our initial public offering as described
in our final prospectus filed with the Securities and Exchange Commission on April 19, 2011
pursuant to Rule 424(b). From the effective date of the registration statement to June 30, 2011,
the Company used approximately $492.3 million of net offering proceeds for the acquisition of flight equipment.
No such payments were direct of indirect payments to directors, officers, general partners of the
Company or their associates, to
persons owning ten percent or more of any class of equity securities of the Company or to affiliates of the Company.

Amendment No. 7 to the Purchase Agreement COM0188-10, dated June 15, 2011, by and between
Air Lease
Corporation and Embraer S.A. (f/k/a Embraer  Empresa Brasileira de Aeronáutica S.A.)

31.1

Certification of the Chairman and Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act
of 2002

31.2

Certification of the Senior Vice President and Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-
Oxley Act of 2002

32.1

Certification of the Chairman and Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of the Senior Vice President and Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

XBRL Instance Document

101.SCH*

XBRL Taxonomy Extension Schema

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase

101.DEF*

XBRL Taxonomy Extension Definition Linkbase

101.LAB*

XBRL Taxonomy Extension Label Linkbase

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase



The registrant has omitted confidential portions of the referenced exhibit and filed
such confidential portions separately with the Securities and Exchange Commission pursuant
to a request for confidential treatment under Rule 24b-2 promulgated under the Securities
Exchange Act of 1934, as amended.

*

Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed
or part of a registration statement or prospectus for purposes of sections 11 or 12 of the
Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the
Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability
under those sections.

Amendment No. 6 to the Purchase Agreement COM0188-10, dated May 2, 2011, by and
between Air Lease
Corporation and Embraer S.A. (f/k/a Embraer  Empresa Brasileira de Aeronáutica S.A.)

10.2

Amendment No. 7 to the Purchase Agreement COM0188-10, dated June 15, 2011, by and between
Air Lease
Corporation and Embraer S.A. (f/k/a Embraer  Empresa Brasileira de Aeronáutica S.A.)

31.1

Certification of the Chairman and Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of
2002

31.2

Certification of the Senior Vice President and Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-
Oxley Act of 2002

32.1

Certification of the Chairman and Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of the Senior Vice President and Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

XBRL Instance Document

101.SCH*

XBRL Taxonomy Extension Schema

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase

101.DEF*

XBRL Taxonomy Extension Definition Linkbase

101.LAB*

XBRL Taxonomy Extension Label Linkbase

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase



The registrant has omitted confidential portions of the referenced exhibit
and filed such confidential portions separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment under Rule 24b-2 promulgated
under the Securities Exchange Act of 1934, as amended.

*

Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not
filed or part of a registration statement or prospectus for purposes of sections 11 or 12
of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18
of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to
liability under those sections.